In many emerging economies the electricity sector remains characterized by integrated monopolies, that are state owned. These state-owned-enterprises (SOEs) frequently own and operate all aspects of the generation, transmission, and distribution of electricity. (An SOE is a corporate entity, recognized by national law, in which the state exercises full or partial ownership.) Aside from the power sector, SOEs are often a government’s preferred structure for other utilities and infrastructure industries such as water, transport, telecommunication, and sometimes finance. Frequently, SOEs play a substantial role in the GDP and employment of national economies.
Good governance of SOEs is therefore vital to ensuring that their contributions to economic efficiency and competitiveness remain positive. In this vein, the OECD has developed their Guidelines on Corporate Governance of State-Owned Enterprises. The Guidelines represent current global best practice for the oversight and management of SOE. This two-month series is devoted to a summary of the seven guidelines and why they are so important. Three are summarized this month and the remaining four next month. Many of the practices discussed below have been foundational in reform efforts undertaken by projects on which I have recently worked, including Uzbekistan, Georgia, Palau, Eswatini and Lesotho.
Richard Swanson, Ph.D.
Asset valuation and project finance expert, specializing in financial and economic analysis of civil infrastructure assets.